Is Iran’s Economy Growing? An Assessment of the IMF’s 2011 Report on Iran
Middle East Brief 57, December 2011
In August 2011, the International Monetary Fund (IMF) published an unusually controversial assessment of Iran’s economy that projected a relatively positive economic future. In this Brief, Prof. Nader Habibi critically evaluates the main factors that account for the report’s positive assessment and concludes that the IMF forecast underestimates the political and geopolitical threats facing Iran; it also underestimates the adverse effects of governance issues and factional politics on the successful implementation of economic reforms that are crucial for Iran’s economic growth. Nonetheless, Prof. Habibi also argues that while sanctions and domestic political mismanagement will hurt the economy, as long as Iran can avoid a comprehensive oil embargo and a military confrontation with the West, the likelihood of a severe economic collapse remains small.